XLRI Xavier School of Management

Operations Management II (End Term)

Batch: BM 23-25 Term-III

Open Book, and Open Notes

Total 30 Marks Duration 90 minutes

Name: ________________ Roll No.: ________________

Read the following instructions carefully:
1. All the questions are compulsory.
2. Write the final answers on the answer sheets provided and show all the calculations
after every question.
3. Wherever required, express the answers correct up to two places of decimal.
4. In case of any ambiguity, state the respective assumptions and write the answers. For
all genuine assumptions and the corresponding answers, marks will be awarded.
5. Use the answer sheet to do all the rough work.

Multiple Choice Questions [15×1=15 Marks]

In the following set of questions, there is only one correct answer. Each question

carries one mark. There are no negative marks for incorrect answers.

1. When the production process is on, a company conducts inspections and tests on
finished products to ensure they meet quality standards. What type of costs best
describe the above?

a. Prevention Costs
b. Appraisal Costs
c. External Failure Costs
d. Internal Failure Costs

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2. Which of the following statements best describes the nature of assignable variations?

a. They are corrected by making adjustments in the production process.

b. They are inherent to the process and cannot be eliminated.
c. They are intermittent and arise due to specific identifiable causes.
d. They are uniform and evenly distributed throughout the process.

3. Which of the following is not true regarding Process Capability Index (𝑪𝑷 𝒐𝒓 𝑪𝑷𝑲 )?

a. Process Capability Index overestimates the Process Capability when the process
comprises both common and assignable variations.
b. The Process Capability Index requires the production process to be normally
distributed.
c. The Process Capability Index can be calculated irrespective of whether the process is
centred around the upper and lower specification limits.
d. The higher the value of the Process Capability Index, more capable is the production
process to meet the requirements.

4. A control chart for the mean diameter of ball bearings is constructed. It is found that
98% of the samples have a mean within the control limits. What is the most
appropriate interpretation of the same?

a. It states that 98% of the samples are found to conform to the specifications of the clients.
b. It states that 98% of the samples are found to be under statistical control.
c. It states that 98% of the samples have variations small enough to remain within the
specification limits.
d. It states that 98% of the samples are spread out evenly on both sides of the grand mean.

5. Which of the following best describes the difference between "Quality of

Conformance" and "Quality of Design?"

a. Quality of Conformance focuses on meeting customer expectations, while Quality of

Design focuses on meeting industry standards.
b. Quality of Conformance measures the inherent value of the product, while Quality of
Design measures its performance.
c. Quality of Conformance refers to meeting the client’s requirements with respect to
upper and lower specification limits, while Quality of Design focusses on the degree of
excellence of the product.
d. Quality of Conformance focusses on the production process, while Quality of Design
focusses on the product design.

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6. Product liability is considered to be a critical issue pertaining to the cost of poor quality.
Which of the following best describes the issue of product liability?

a. An electronics manufacturer suffered loss of business in their refrigerator division due

to manufacturing televisions of poor quality.
b. A substantial magnitude of cost was incurred by a manufacturer to recall its products
after a huge number of customer complaints were received.
c. The entire design of the product needed to be changed after it was found not to meet
the client’s expectations.
d. A customer filed a lawsuit against a mobile phone manufacturer after suffering from an
accident while charging the mobile phone.

7. The objective of six sigma process is to ensure that there are no more than 3.4 defects
for every million opportunities to produce some feature of a part. Suppose the client
has specified the upper and lower specification limits (USL and LSL). Which of the
following must be true?

a. The firm needs to adjust the process variation to keep the 3𝜎 limits around the process
mean 𝜇 within LSL and USL.
b. The firm needs to adjust the process variation to keep the 6𝜎 limits around the process
mean 𝜇 within LSL and USL.
c. The firm acknowledges that machines suffer wear and tear in the long run and hence
the process mean shifts either way by a magnitude of 1.5 𝜎.
d. The firm needs to adjust the process variation to keep the LSL and USL within 6𝜎
limits around the process mean 𝜇.

8. Which of the following is definitely not true for Acceptance Sampling?

a. Indecisiveness during sampling may result in the consumer drawing another sample.
b. In full inspection, the producer’s risk is higher than the consumer’s risk.
c. In a single sampling plan, we choose a single threshold value of the number of
defectives in sample to either reject or accept a lot.
d. Double sampling plans are preferred when the number of defectives in a sample is of
some intermediate value.

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9. In an ideal sampling plan which of the following must be true?

a. If LTPD is greater than AQL, consumer’s risk is triggered the moment the percentage
of defectives exceed AQL.
b. In an ideal sampling plan, if the number of defectives is below AQL, then the producer’s
risk should be zero.
c. The slope of an Operating Characteristics Curve necessarily determines whether the
consumer will be at a higher risk than the producer.
d. Operating Characteristics Curve is necessarily more beneficial when the sample sizes
are closer to the lot sizes.

10. Which of the following is least likely to be an advantage of SMED?

a. Lower batch sizes

b. Better product mix
c. Improved production time
d. Balanced rate of production across all processes

11. Which of the following is false regarding the Cellular layouts?

a. Each cell behaves like a mini process layout.

b. Cellular layouts help to improve the product mix without compromising much on the
product volume.
c. In cellular layouts, cells are constructed on the basis of either product similarities or
process similarities.
d. In a cell, not all products are required to be processed on all operations.

12. Which of the following is incorrect for Operational Equipment Effectiveness

(O.E.E.)?

a. O.E.E. is always smaller than or equal to each of the availability efficiency, operational
(or performance) efficiency, and quality efficiency.
b. O.E.E. remains unaffected if the firm moves from 2 shifts a day to 1 shift a day.
c. The scheduled set-up times for machines reduce Availability Efficiency and thereby
O.E.E.
d. O.E.E. becomes lower if the mean time to repair the machines becomes higher.

13. Which of the following is the best associated with Andon systems?

a. It facilitates quick response to production abnormalities on the shopfloor.

b. It facilitates adjusting production speeds to synchronize with the final demand thereby
avoiding inventory accumulation.
c. It facilitates quick changeovers, thereby enabling firms to have a better product mix.
d. It facilitates operator intervention in machine repairs.

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 14. A software system is kept in a library to facilitate the users by providing them with call
numbers for every book. Which of the following types of waste is the best reduced by
such an intervention?

a. Waiting
b. Unnecessary Transportation
c. Unnecessary Motion
d. Higher Inventory of Books

15. Which of the following describes the advantages of the 5S intervention the least?

a. It is useful to bring safety to the workplace.

b. It adds to worker efficiency by reducing unnecessary motions.
c. It reduces unnecessary inventory.
d. It reduces the frequency of inspection of the work area.

Numerical Problems

Q1: XYZ has decided to keep a Lot Tolerance Percent Defective (LTPD) of 9 percent for
all its components. It purchases a particular component from ABC Spares Pvt. Ltd. XYZ has
an Acceptance Quality Level of 3 percent in its production facility. XYZ has a consumer
risk of 10 percent, while ABC has a production risk of 5 percent. In order to satisfy all the
said objectives, XYZ needs to develop a sampling plan that will include the sample size and
the allowable number of defectives. Use the table below to find the sample size and the
allowable number of defectives in the sample. [5 Marks]

c LTPD/AQL n. AQL
0 44.89 0.052
1 10.946 0.355
2 6.509 0.818
3 4.89 1.366
4 4.057 1.97
5 3.549 2.613
6 3.206 3.286
7 2.957 3.981
8 2.768 4.695
9 2.618 5.426

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Sol
Here, LTPD/AQL = 3
Thus, 𝑐 = 7
Further, 𝑛. 𝐴𝑄𝐿 = 3.981
Hence, 𝑛 = 133

Q2: Consider the following production process indicated by the diagram below:

Buffer

A B Demand= 90/hr

150/hr 105/hr

In the production process above, operation A (output rate 150/hour) feeds into operation B
(output rate 105/hour). If operation B is occupied, inventory is stored intermediately. The
demand placed on the system is 90 per hour. Machine A remains dysfunctional for either 2
hours after every 8 hours (i.e., 20% of the time) or 1 hour in after every 3 hours (i.e., 25% of
the time) with respective probabilities of 0.8 and 0.2.

Calculate the maximum lead time demand and the required number of Kanbans of size 5
required.
[5 marks]
Sol: Max Lead Time= 2 hours + time taken to fill 1 kanban
5
Thus, Max Lead Time= 2 + 150
5
Max Lead Time Demand = (2 + 150) 90 = 183
No. of Kanbans = 183/5 = 36.6 (=37 approximately)
Q3: A quality inspector on the shop floor measures the time taken for each successive unit
coming out of the production system. He collects 4 different samples of size 7, each consisting
of the time intervals (in seconds) between two successive units being produced by the system.
The following table displays data for the same:

Sample 1 Sample 2 Sample 3 Sample 4

60 64 74 75
61 63 64 68
65 70 61 63
60 68 77 66
63 61 63 65
65 62 65 70
63 70 66 64

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Construct a control chart that will describe 99.5% of the time interval variation. It is known
that the process standard deviation is 5 seconds. Use the following table for reference (in case
required). Also, if required, one can use the following Standard Normal distribution table.
[5 Marks]

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Sol:
Here 𝑛 = 7, 𝑥̿ = 65.57143, 𝜎 = 5
The corresponding value of 𝑧 = 2.81
Thus, 𝑈𝐶𝐿 = 70.876 and 𝐿𝐶𝐿 = 60.266

P.S. Out of two tables given, the first table is redundant.